RED HOT ! MORGAN STANLEY ISSUED STRONG BUY TARGET $150 ON ALIBABA
Morgan Stanley analysts issued a Research Tactical Idea call on Alibaba (NYSE:BABA) shares in a note to clients on Tuesday, with the firm believing the "share price will rise in absolute terms over the next 60 days."
The analysts, who have an Overweight rating and a $150 per share price target on the stock, explained the call is because the stock has traded off recently, making the short-term valuation "much more compelling."
We point to: 1) an inflection in customer management revenue (CMR) on the back of consumption recovery in China; and 2) announced corporate restructuring to unlock Alibaba's value as we believe it will shift the market's perspective to value the company on a sum-of-the-parts perspective," the analysts wrote.
"Valuation looks attractive at 9x F2024e P/E and ex-cash P/E of 7.5x. Alibaba has ~US$21bn remaining in its share repurchase program (effective through March 2025)," they added.
Morgan Stanley views BABA as a key beneficiary of China's reopening and a proxy for inflows to China from global investors.
"We estimate that there is about an 80%+ (or "highly likely") probability for the scenario," declared the analysts.
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JPMorgan analyst Alex Yao believed Alibaba’s reorganization could bring about more significant implications to business fundamentals and share price over the mid-to-longer term, and expected positive share price reaction to the reorganization announcement and the sum-of-the-parts (SOTP) valuation analysis indicated a US$210/HK$205 value per share as a blue sky scenario.
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The analyst's bull-case value is $530 billion ($200 per share). He sees potential for more than 2x upside to his bull case of $200 per share.
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